BY TOM GRACE
THE DAILY STAR
Facing a projected shortfall of more than $4 million this year, Cooperstown-based Bassett Healthcare Network has suspended employee retirement contributions for the rest of the year.
The health care network, which serves eight counties and employs about 3,200 people, had a good year in 2010, but 2011 has been weaker for many providers, including Bassett, CEO Dr. William Streck said.
The suspension of retirement contributions is expected to allow Bassett to finish the year without a deficit or reduction in patient services, he said.
Outpatient activity has increased this year, but hospital admissions have not met projections.
Coupled with reduced payments from Medicare and Medicaid, fewer than expected admissions have led to a deficit of between 1 percent and 2 percent in an approximately $400 million annual budget, he said. Asked why fewer than expected patients have been admitted so far this year, Streck said he was unsure, but the numbers may be related to economic problems in the state and nation.
Bassett contributes to employees’ 401(k) plans, nest eggs that accrue interest during an employee’s working years. Streck said the decision to suspend contributions was taken reluctantly, but will ensure that Bassett will not have to reduce patient services or lay off workers.
Contributions to employees’ retirement plans will resume in January, he said.
Many hospitals in the United States are struggling with finances this year, a situation outlined in the June 27 edition of industry journal Modern Healthcare.
That magazine’s cover story, “Saving it for later,” describes how “healthy hospitals are turning to layoffs”to remain viable in the future.
Streck said that Bassett, which has been growing, did not want to resort to layoffs, but the provider’s board of directors wanted to be proactive to keep thebooks in the black.
While the suspension may eliminate the projected shortfall for this year, hospitals including Bassett, will face challenging years in 2012 and 2013 as health care reform measures take effect, he said.
The federal Affordable Care Act is expected to reduce payments to the network by about $86 million over 10 years, with reductions to Bassett Medical Center accounting for about $68 million of that, he said.
To cope with projected cuts, Bassett’s administrators and board are looking for ways to maximize efficiency without compromising service, he said. “We see this trend where Medicare and Medicaid are going to pay less, and the whole industry is working to cope with that,” he said. “Some of the best and most successful hospitals are getting ready to deal with it.
“We think we have a pretty good system to deal with changes, but that doesn’t mean it will be easy. There really is no magic bullet.”